The Definitive Guide how to Improve your Credit Score in the USA

3 easy steps

The Definitive Guide how to Improve your Credit Score in the USA

Your credit worthiness has a monstrous impact on so many areas of your life from obtaining insurance, to getting a job, and to even being able to own a home.

The fact of the matter is, that you need to do what it takes to get your credit situation in order. With that thought in mind, we present an interview with Netiva Heard, also known as The Frugal CrediTnista. She shared a wealth of knowledge about how credit works from her over 13 years of experience. Her answers to the most acute questions will surely equip and educate you how to turn your credit situation around once and for all.

Netiva Heard, a Credit Counselor, Personal Finance Coach and ‘Real Life’ Budgeting Enthusiast, the founder of MNH Credit Solutions , shares her life story of getting into debts, being absolutely broken and dealing with all these problems to improve her credit score in the end. She was running a business, but it failed. Moreover she was diagnosed with cancer, and in a couple of months treatment she found out that she was pregnant. Not an easy situation, isn’t it? She tried to find help from the Government, but all of the people she referred to were really nasty. So she ended up with having a lot of debts, a bankruptcy and only $160 to feed her family. She says: I’ll never forget my husband had his last $50 and he …lost it!”

But! They were able to overcome cancer, to overcome their debts, and by 2013, which was only 3.5 years later, they were able to buy their house with cash. A lot of people today are there where they once were. A lot of people want to know how to face and do with such a situation. I believe, Netiva’s advice must be really helpful here. So if you look at your situation and think that’s all, that’s the last, don’t! Turn to the other chapter of your life with our tips and support.

Do you know how to manage your FICO® Scores? Watch this video to learn about some credit score dynamics that can help you manage your FICO® Scores.

From the interview you will learn:

What is a credit score.

What it is comprised of.

How to correct the most common mistakes people make.

Techniques to improve your credit score.

How to find a reliable credit service and not get a victim of a scam.

In your opinion, what are the most common mistakes that people make in regards of taking care of their credit?

Number one – is not making timely payments. The matter is when the people have got their money, or they’ve got some of their money they don’t really think about paying it off. The key thing is not just lending but also making sure the borrowers are informed about the sum and date when it’s due.

Not informing your creditors that you’re having an emergency is gonna prevent you from paying on time. So a lot of companies have hardship problems conditions which can allow you perhaps to reduce the interest, or make only half-payments or even put your payments to the rear. But you won’t know this because you’re waiting for the miracle to happen. And you don’t contact them until you are already late.

The next problem, what should probably be number 1, is not being financially organized. You should better plan your finances. If you’re planning paying off your debts, how will you know that your debt plan is accurate if you’re not organized what your debts are. How are you gonna improve your credits if you don’t keep any financial records?

How is a financial score calculated?

When we talk about financial score we talk about FICO, because it’s like the key score which dominates the market. FICO is comprised of five parts:

1. Our payment history: opened accounts, closed accounts, negative accounts, positive accounts, etc. So the best thing to do is to pay your bills on time.

2. Utilization – keeping your balances super low. Credit card factor is very important here, as the FICO calls it the amount owed, and looks how well you are keeping this amount in balance with the total amount of your credit card limit.

3. Length of age. The FICO is looking at the oldest account on your credit report in addition to the average age of all of your accounts.

4. New credit. The FICO looks at the appearance of new accounts on your credit report.

5. Credit mix. It shows how well an individual has handled different types of accounts.

How is someone able to obtain his credit score?

There are free options. We have Credit Karma which will give you a venture score. It’s not a FICO but it’s also good because more and more lenders are starting to take both. You can also check your banks, your credit cards because they often offer either a consumer education score or a FICO score.

The first one is just for your education, it’s not used on the marketplace at all. But it does let you know what range you are in. And for the FICO you probably have to pay. There’s MyFICO.com, I really love their reports but they are rather expensive - $60. If you wanna a cheaper option experiment having CreditCheckTotal.com and FreeCreditReport.com. These are top three for getting a FICO score.

How long does it take for someone to see some gains or improvements of their credit?

You see some improvements in about 90 days. And you’ll see a good track of a record in about a year. If you’ve experienced a bankruptcy it’ll take about 24 months before your score takes off. And you’ll recover completely in 5 years. But I would say, your credit is like fingerprints. You may see some similarities, but actually each one is individual.

What’s step Number 1 for those who have a bad credit?

Get organized. Think where you’ll take the credit report, where you’re gonna put those reports, Make a plan.

How can a person separate the scams from the real companies that can help them?

The best thing you can do is being educated yourself. Though there are credit repair organizations and counsellors, you still need to know yourself what they can and can’t do.

Get a checklist for you and remember:

There should be no payment before work, at first work – then charge,

These organizations cannot guarantee anything, they can’t guarantee if something is gonna be removed or not because all they are doing is pulling on your consumer rights and asking for information.

Know what you are in need of and what you are paying for.

So be educated and be clear on what you need specifically in order to repair your credit.

Are there any techniques or strategies to improve a credit that the audience can implement?

Learn how to identify errors on your credit report. Each credit report has 22 to 26 depending on the type of report pieces of information. So you need to look at each piece and make sure that it meets 4 criteria:

It’s accurate,

It doesn’t have any missing or incomplete information,

Every piece of information should be verifiable,

It should be reported according to the time frame.

Should the borrowers pay the collectors? What should they ask them for?

First of all we must also know our consumers’ rights. Before you give a dollar to the collector get informed of your rights: you may claim the proof that they own this debt, the proof that the amount is correct, the proof that they actually bought this debt. Until you get this information, you don’t have to pay anything to them.

Is the budgeting process important for handling debts?

Let’s say we have an account that’s past due, there appear several questions you need to answer to handle this situation.

1. How are you managing your funds so as to avoid being in this position again?

2. How much money do you have in case some people come and claim the debt?

And then go to the next step and start doing payment arrangements or things of that sort.

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For peace of mind, and to ensure you know what you're going to pay, ask your lender exactly what fees are included in the APR figure they offer you.

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